Income measurement Concepts lustration Facts Net (free)cash flow=$(88,000) Operating cash flow = $12,000 Economic income $37,000 ($12, 000 rental income $25, 000 holding gain) Accounting income=$11, 500( $12,000 rental income -$500 depreciation*) Condo's useful life is 50 years and its salvage value is $75,000--yearly straight-line depreciation is $500Illustration Facts: • Net (free) cash flow = $(88,000) • Operating cash flow = $12,000 • Economic income = $37,000 • ($12,000 rental income + $25,000 holding gain) • Accounting income = $11,500 ($12,000 rental income - $500 depreciation*) *Condo’s useful life is 50 years and its salvage value is $75,000—yearly straight-line depreciation is $500 Income Measurement Concepts